The following is a copy and paste from MRketPlace.com received today via email that I thought you might find of interest. The yellow high lights were done by me.
As you have heard me say:
Control inventories! ... Do not allow slow sellers to remain on your floor! ... Take fast markdowns!... Don’t over buy! ... Make more market trips! ... Give the customer better service then they expect!... Write thank you notes to every customer!
Milton Waldoff
The Waldoff Group
In The News
Retailers and suppliers brace for slow recovery
September 18, 2009
Faced with one of the most challenging years on record, retailers and their suppliers are being forced to adjust their business strategies to deal with this drearier operating environment. And with retail inventories down, discounts up, and credit still tight, many believe that consumer spending will lag the turnaround of the U.S. financial markets, new research reveals.
Few industries have felt the effects of the recession as acutely as retail.
The impact of plummeting consumer spending on the sector has been well documented, with many retailers dealing with tumbling revenues, slow-turning inventory, steep discounts, and stressed cash flow.
As a result, many middle-market merchants have spent late-2008/2009 in a state of strategic and operational stasis, limiting activity, slowing spending, renegotiating leases, and holding on tight as they wait for small signs of recovery.
The impact has not just been on retailers, but also on the vendors that manufacture and distribute the apparel and other goods retailers sell.
With retailers working hard to conserve their cash and deal with declining demand, they are purchasing less from their suppliers, and may be paying those suppliers more slowly, straining their cash flow.
How harsh have things been?
According to a new study produced by Forbes Insights in association with financial services firm CIT, nearly two out of three suppliers say they have been impacted by a retail customer bankruptcy this past year.
And worryingly, many retailers are taking a more conservative and cautious approach to the upcoming holiday season by controlling their inventories, and are planning more aggressive discounts earlier in the season.
"Many retailers continue to be concerned about consumer demand and are following conservative inventory and pricing tactics in anticipation of the upcoming holiday season, trying to maintain liquidity, so that they can be better positioned for what is hopefully resumption in consumer spending in 2010," explains Burt Feinberg, managing director and industry group head of retail finance at CIT.
Key findings
Key findings of the research report, 'U.S. Small and Middle Market Outlook 2009: Retailers and Suppliers Take Stock of Economic Downturn,' include:
Key findings of the research report, 'U.S. Small and Middle Market Outlook 2009: Retailers and Suppliers Take Stock of Economic Downturn,' include:
Cautiously awaiting the return of consumer confidence. While half of middle-market retailers saw their revenues decline over the past 12 months, 41% expect their revenues to grow over the next year. However, growth rates may be tempered by a slow recovery in consumer spending.
Cutting costs and conserving cash. Falling revenues have caused many retailers to take steps to cut costs and conserve cash. They have halted planned expansions, put off store renovations and redesigns, re-merchandised their shelves, and closed existing stores.
They are also revising their leases, and seeking new terms with creditors.
Increased M&A activity on the horizon. The primary drivers of M&A activity will be the greater availability of credit, reduced valuations and the need for weaker companies to merge.
Inventory issues: Slow-turning inventory has been a burden for middle-market merchants. Even though they are stocking less than they did a year ago, many still feel that their cutbacks have not been deep enough. As a result, discounting has been rampant as retailers look to turn slow-selling goods.
Retailer bankruptcies impacting suppliers. Nearly two out of three have been impacted by a retail customer bankruptcy this past year, and nearly the same number expects additional retail bankruptcies in the next 12 months.
Many are turning to factoring and credit insurance more to protect themselves from possible customer bankruptcies.
. Managing customer relationships. To protect their businesses, suppliers are doing less business with retail customers with weak finances, they are monitoring their accounts receivable more closely, and are imposing more stringent credit terms and deposits for new customers.
At the same time, many are offering incentives to retail customers who pay early.
Guarded about the future
Not surprisingly, retailers remain quite guarded about the future, with most believing it will take several years before consumer spending returns to pre-recessionary levels.
Nevertheless, they remain hopeful for a possible turnaround beginning in 2010 to set their industry back on course.
Not surprisingly, retailers remain quite guarded about the future, with most believing it will take several years before consumer spending returns to pre-recessionary levels.
Nevertheless, they remain hopeful for a possible turnaround beginning in 2010 to set their industry back on course.
And for those retailers and suppliers that are able to weather these challenges, better times may lie ahead.
A copy of the complete report can be downloaded here. (Note: Since this is a copy and paste you cannot download the complete report here, however you can go to MRketplace.com and you will be able.
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